Archive for Wall Street

Where Will It End?

Posted in Economy with tags , , on October 9, 2008 by gyma

Today the stock market closed at 8,579.19, a drop of 678.91 points.  A couple more days like today and Roubini’s adjusted prediction of the Dow dropping to 7,000 will become reality.

I’m decidedly ignorant when it comes to financial matters related to the markets, but it isn’t because I don’t try.  I’ve read several books, taken classes and workshops and continue researching online the best I can.  I still don’t get it and probably never will.

Those of us over 50 are especially worried because we live in a country that doesn’t appreciate wisdom or knowledge so we have trouble getting hired when we lose our jobs.  We are also some of the first to be given pink slips because we have worked hard and made more money than those just out of college.  Many of us don’t have children and will have to take care of ourselves without much family to help out during difficult times.

I know I would not be sleeping these days if I hadn’t bitten the bullet a couple of weeks ago and pulled all our investments out of the stock market and opened relatively safe CDs with that money.  Had we tried waiting it out, we would have lost $50,000 in just the last 3 weeks and this would have been in addition to the $35,000 we had already lost in the last year.  This amount is the equivalent of about 14 years worth of withdrawals for us.

My heart goes out to all those who have lost so much these last several months because I think all those gains were based on a shaky house of cards.  It will take many years for seniors to regain what they’ve lost and we’ll all be the poorer for it.

I’m sure John McCain doesn’t read my blog, but I want him to start focusing on our problems and how he would fix them, rather than trying to portray Obama as a scary, black man.  Okay, maybe not, because if he did have a couple of good ideas (doubtful at this point) he might convince enough people to actually vote for him!

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Wall Street Jitters

Posted in Economy with tags , , on October 7, 2008 by gyma

I see where the Dow closed down more than 450 500 points today.  Ouch! 

Nouriel Roubini, an economist at New York University and frequent guest on Charlie Rose, believes the U.S. economy is in for a rude awakening.  On the RGE Monitor website [subscription required] he has written an article titled “The Coming US Consumption Bust: 12 Reasons Why the US Consumer is in Serious Trouble and Faltering.” 

You shouldn’t be surprised to read that his first three reasons are 1) consumers have been gorging at the mall and are now in negative saving territory; 2) with real estate prices falling, the home-financed ATM machines are now empty and can no longer fuel runaway consumerism; and 3) home equity withdrawal peaked in 2005 at a whopping $700bn, but has now dropped to a paltry $24bn with lenders becoming more and more wary of approving home equity loans.  You can read all 12 reasons at Fabius Maximus.

What does this all mean?  Roubini says it has been at least 18 years since we’ve seen even a single quarter of decreased spending, so expect the coming recession to be both deep and long.  He is predicting it will last at least 18 months as Americans try to pay down debt and begin putting money away again.

We’ve already lost close to 750,000 jobs so far this year and a recession this deep will mean many businesses will close their doors and more and more people will be unemployed.  But can we really afford to continue allowing China to finance our wanton spending?

Isn’t this all the more reason to get out of Iraq as quickly as possible?  And I can’t be the only person in this country who is angry that McCain and Palin don’t find this situation important enough to take seriously.  Rather they are spending their time whipping up their automon followers into a frenzy over less-than-serious relationships with a man who hasn’t been in trouble with the law for more than 40 years and taking Obama’s speeches out of context.

Just before sitting down to write this post, I did a quick calculation based on yesterday’s closing stock market.  Had we not called it quits two weeks ago, we’d be nearly $14,000 poorer today, and that doesn’t take into account the additional 450 500+ point drop today.  I do believe the market will eventually rally, but I think it will take 5-10 years to reach 14,000 again.  In the meantime, Roubini’s prediction is that the Dow will most likely bottom out at 8,000 before it begins its recovery.

Hold on, it’s going to be a bumpy ride!

UPDATE: We would have lost an additional $5K today alone.

So. Very. Angry.

Posted in Money Matters, Politics with tags , , , on September 18, 2008 by gyma

I’ve been closely following the financial news over the last week and I’m really angry over what our elected officials have done to this country.  We’ve been repeatedly lied to for too many years and I no longer have any confidence in our government.  Can Barack Obama change it?  I honestly don’t know.  What I do know is I’m not willing to give Republicans another shot at trying to right this sinking ship.  And where in the hell has our dear leader, George W. Bush, been hiding?  Not that I want to see his pathetic face, but the least he could do was get on television and attempt to make us feel better.  Not. A. Peep.

At the end 1999 we bought our current house.  My husband was retired with social security income, we were 100% debt free and I had a part-time job at the public library making $17/hr.  We had more money invested in IRAs than we were requesting to borrow.  We also had a 45% down payment and wanted to finance less than $100K for this house.  Our payments would have been less than rent for a 1-bedroom apartment.  But no one wanted to give us a loan.  We had purchased our previous home for cash and had taken out a small home equity loan to do some remodeling.  We had excellent credit.  And no one wanted to give us a loan!  We ended up getting a loan with an interest rate nearly 2% higher than everyone else.

I can’t tell you how angry this makes me now.  As it turned out we paid off that crappy loan in 8 years and once again are 100% debt free.  Not so for much of the rest of this country.

Reading this article by Dean Starkman in the Columbia  Journalism Review only makes me angrier.  Much angrier.  Starkman talks not only about the total lack of regulation, the greed and malpractice of the Wizards of Wall Street, but also the media’s failure to accurately report what was happening.  Epic Fail all the way around.  From the article:

From 2004, Countrywide led the market in rolling out new “products” that were basically bureaucratic ways of approving a loan to anybody. The complaint said Countrywide threatened to fire underwriters for (my emphasis) attempting to verify a borrower’s ability to pay.

We’re being told not to panic but in the next sentence we’re hearing this is far from over.  Now I’m angry and spooked.  I’ve lost tens of thousands of dollars in about a year, which represents 7.5 years worth of contributions to my 401K.  I now understand the money I earned in the market was all based on a scam, a house of cards that is now tumbling down all around us.  I can only hope George W. Bush and John and Cindy McCain are heavily invested in this crap, too, and their losses are in the tens of millions.

This country can’t continue sticking its finger in the dike every time a large financial or insurance institution starts to fall.  Comprehensive overhaul is needed and sooner rather than later.  But I’m not hearing much of that coming out of Washington these days.  Rather I hear John McCain, who’s own party has been in charge these last 8 years, talking about how he’s going to spank Wall Street and everything will be better.  Yeah, right.  If you believe that, I have a Bridge to Nowhere I’d like to sell you.

Since the last 8 years of gains on Wall Street were built on quicksand, I can’t comprehend how long it will take for this to bottom out and begin reversing.  With less than 10 years to recover my losses, I made the very difficult decision last night to get out of the market this morning and that’s what I did.  Cashed out completely and now I’ll be able to sleep better.  When the check arrives I’ll seek out a financially healthy local bank and put it in a CD and wait out the storm.  Sad as this is, money market accounts aren’t even safe investments these days!

[h/t Hullabaloo]